Davos, Jan 23 (PTI) Former RBI Governor Raghuram Rajan on
Tuesday said the Western world must realise they cannot go a
long way without the help of the emerging economies and warned
that no one would be able to resolve any problem of a
'fractured world' if things are not set right soon.

Without naming any country, he said the West must realise
that their population is ageing and the demand for their
products would mostly come from the emerging world.

Speaking in Davos at a session of the World Economic
Forum (WEF) Annual Meeting, Rajan said there is a risk that by
the time the West goes to the emerging world for their
support, they may have to answer quite a few questions about
why they did not share the benefits earlier.

He warned that the approach of the Western world must
change soon for the good, or else there may be a chance that
we are not able to solve any of the problems of the 'fractured
world'.

About issues facing the Western world, he listed
technology, ageing population and climate change.

Rajan was speaking at a session on the power of economic
narratives and how policymakers can address the challenges of
the 21st century.

He said some governments such as Singapore have done
something to address the problems arising out of income
inequality and the divisions in the society by setting up
housing projects where middle class and lower middle class
families can live together.

Rajan said he's not sure about the US but some countries
are doing things in this area and certainly the governments
can play a role here.

The Chicago University professor is known for his frank
views on various economic and monetary policy matters and is
credited with having predicted the global financial crisis of
2007.

Rajan also took on the economists who frown upon the idea
of economic narratives and said it has become difficult to
make people believe in them for setting things right.

"When the economist hears the word narratives and stories
he thinks it's below me. They believe they are beyond the
tradition of narratives," he said.

Post World War II, we realised we have to come together
once again and we need to break barriers of trade and
everything else, he said.

Asked whether he is optimistic or pessimistic on the
issue of narratives, Rajan said politicians just pick the
economic theory that fits in their scheme of things but he
hopes things do not go out of hand and there is a solution
before that.

He also said that for a long time technocrats were given
a free hand.

"That pushed growth for a long time but then frictions
began including between right and the left," Rajan said,
adding that since the global financial crisis, the world has
begun to question the technocrats.

He cautioned that the economists have a much harder task
on Tuesday and there are a lot of answers that they need to
come up with.

"But the even harder task is to convince people that
believe us and we will set things right," he said.

Rajan said we should realise that big ideas are always
thought at least 15-20 years in advance.

"So if we talk about universal basic income, we can't
brush it aside and today we are seeing people are talking
about it," he said while giving examples.

In another example, he said driverless cars are on the
horizon on Tuesday but we should also assess their impact on
jobs.

"We need to think what we are going to do when these
people go jobless once driverless cars become widespread
reality on our roads," he said.